Who Owns LTE Patents?

This year, LTE (Long Term Evolution) the 4th generation (4G) mobile network communication technology is rolled out in many countries worldwide. It looks like it will be an even greater success than the currently prevailing UMTS/GSM (3G/2G) technology. LTE will bring communication one more step closer to the vision of an ubiquitous network, connecting not only people but even machines like cars as well as domestic appliances like washing machines or even refrigerators. In short, LTE network technology will be a product with an enormous sales potential which can hardly be overestimated.

Like the former generations UMTS/GSM, also LTE has been developed in cooperation through standardization processes, in which the ETSI (European Telecommunication Standards Institute) has played a decisive role. And like the UMTS/GSM Technology LTE is not a single technology but rather a technology package which comprises hundreds or even thousands individual sometimes incremental parts. Almost all market participants had contributed their own technology to this package. And almost all market participants protected their technology by patents. These patents are called essential patents, if they must essentially be implemented to fit the specifications of the standard. That means, implementing LTE products will require extensive licensing activities in which all companies who own LTE patents must be included sooner or later.

Finding out who those companies are is not a big issue. ETSI runs an IPR-Database. The idea behind this database is making available all required licensing information with respect to a particular standard. A simple search about the database comes out with an impressive variety of information. The data shown includes not only the name of the proprietor of the patents but also the number of patents, which one company considers to be essential for a given standard like LTE. And even the patent code, sometimes directly linked to the EPO database, is shown. Further, if available, the database shows also, which company committed to license its technology to fair reasonable and non-discriminatory (frand) terms, whatever this means in detail. Currently, according to the database, no less than about 50 companies are referred to hold patents which read on the LTE standard.

Thus, the big question raising these days is not how to find out who should an implementer of the LTE standard approach for getting all required licenses but rather how should the revenues from marketing LTE products be allocated between these contributors to LTE technology? Respectively, who shall actually receive the merits of the LTE technology?

One could hit upon on the idea to also refer to the ETSI Database for example to make a survey about the distribution of patents between all contributors. This will have the output shown on the table[1] below:

It is apparent that the distribution of patents among the major companies seems to be very regular with a slight imbalance in favor of the US companies. To be sure, we would not make a judgment about the contributions of those companies. Actually, and that is a big issue, we cannot make any reasonable assessment about their contributions and their relevancy for LTE.

To substantiate this opinion, it is at least sufficient to put your attention to the ETSI database FAQ. There it reads that the ETSI Database does not list more than unconfirmed declarations. These declarations are based on members’ bona fide basis. ETSI does not carry out any investigation, searches, or evaluation. The database lists only patents which are declared to be essential by their proprietor. ETSI does neither check the validity of the information provided nor the relevance of the of the particular IPR for a given standard. We would not tell anything about manipulation. But it does not require much imagination that those listings are neither exhaustive nor a good indicator about the real diversity of patents owned by the companies listed. For example, the ETSI Database counts on for each country in which the technology is registered. This results in significantly exaggerated entries.  In other words, the mere ETSI database figures are anything but reliable. Subsequently, it might not be a good idea to solely base licensing negotiations on the figures shown by the ETSI Database.

Stephan Dorn 

[1] see IPEG’s consultancy website under “We Do IP Brokerage”